Suppose you regress the realized rate of appreciation of a foreign currency on a constant and the

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Suppose you regress the realized rate of appreciation of a foreign currency on a constant and the forward premium on the foreign currency. What interpretation can you give to the estimated slope coefficient? If the slope coefficient is negative, is it true that the forward premium is predicting the wrong sign for the rate of appreciation?

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International Financial Management

ISBN: 978-0132162760

2nd edition

Authors: Geert Bekaert, Robert J. Hodrick

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